<PAGE>
Worldwide Health Sciences Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS
(Expressed in United States Dollars)
Common Stocks and Warrants -- 94.32%
Percentage of
Security Shares Value Net Assets
- -------------------------------------------------------------------------------
Major Capitalization - Europe -- 22.58%
- -------------------------------------------------------------------------------
Altana 100,000 $ 6,370,514 4.40%
Ares-Serono 3,350 4,088,766 2.83%
Astra AB, Class A 300,000 5,041,235 3.49%
Novartis AG 3,500 5,595,000 3.87%
Roche Holding AG 370 3,839,841 2.65%
Sanofi SA 68,700 7,725,253 5.34%
- -------------------------------------------------------------------------------
$ 32,660,609 22.58%
- -------------------------------------------------------------------------------
Major Capitalization - Far East -- 9.45%
- -------------------------------------------------------------------------------
Banyu Pharmaceutical Co. 307,000 $ 4,007,474 2.77%
Eisai Co., Ltd. 375,000 4,471,891 3.09%
Fujisawa Pharmaceutical 600,000 5,187,394 3.59%
- -------------------------------------------------------------------------------
$ 13,666,759 9.45%
- -------------------------------------------------------------------------------
Major Capitalization - North America -- 33.61%
- -------------------------------------------------------------------------------
Amgen, Inc./(1)/ 100,000 $ 6,087,500 4.21%
Biochem Pharma, Inc./(1)/ 211,000 3,230,938 2.23%
Biogen, Inc./(1)/ 70,000 3,237,500 2.24%
Centocor, Inc./(1)/ 150,000 4,875,000 3.37%
Genzyme Corp./(1)/ 250,000 6,750,000 4.66%
Lilly (Eli) & Co. 80,000 5,240,000 3.62%
Merck & Co., Inc. 50,000 5,796,875 4.01%
Pharmacia & Upjohn, Inc. 150,000 6,234,375 4.31%
Warner-Lambert Co. 110,000 7,177,499 4.96%
- -------------------------------------------------------------------------------
$ 48,629,687 33.61%
- -------------------------------------------------------------------------------
Specialty Capitalization - Europe -- 4.05%
- -------------------------------------------------------------------------------
Cambridge Antibody
Technology, Ltd./(1)/ 521,040 $ 1,310,520 0.91%
Cambridge Antibody
Technology, Ltd.,
Warrants/(1)(2)(3)/ 15,500 266 0.00%
Ethical Holdings ADR/(1)/ 150,000 42,195 0.03%
Swiss Serum Institute 342 4,500,312 3.11%
- -------------------------------------------------------------------------------
$ 5,853,293 4.05%
- -------------------------------------------------------------------------------
Specialty Capitalization - Far East -- 6.15%
- -------------------------------------------------------------------------------
Biota Holdings, Ltd./(1)/ 1,100,000 $ 2,954,397 2.04%
Rohto Pharmaceutical 500,000 3,176,462 2.20%
Teikoku Hormone
Manufacturing 550,000 2,767,959 1.91%
- -------------------------------------------------------------------------------
$ 8,898,818 6.15%
- -------------------------------------------------------------------------------
Specialty Capitalization - North America -- 18.48%
- -------------------------------------------------------------------------------
Abgenix, Inc./(1)/ 50,000 $ 337,500 0.23%
Agouron Pharmaceuticals,
Inc./(1)/ 150,000 2,887,500 1.99%
Alexion Pharmaceuticals,
Inc./(1)/ 270,000 1,991,250 1.38%
Aviron/(1)/ 125,000 2,710,938 1.87%
Gilead Sciences, Inc./(1)/ 153,500 2,801,375 1.94%
Human Genome Sciences,
Inc./(1)/ 100,000 2,475,000 1.71%
Idec Pharmaceuticals
Corp./(1)/ 55,000 990,000 0.68%
Incyte Pharmaceuticals,
Inc./(1)/ 150,000 2,906,250 2.01%
Lynx Therapeutics,
Inc./(1)/ 150,000 1,387,500 0.96%
Pharmacopeia, Inc./(1)/ 225,000 2,337,885 1.62%
Premier Research
Worldwide/(1)/ 235,000 1,086,875 0.75%
SangStat Medical Corp./(1)/ 125,000 2,078,125 1.44%
Vertex Pharmaceuticals,
Inc./(1)/ 180,000 2,745,000 1.90%
- -------------------------------------------------------------------------------
$ 26,735,198 18.48%
- -------------------------------------------------------------------------------
Total Common Stocks and Warrants
(identified cost $151,937,140) $136,444,364
- -------------------------------------------------------------------------------
Preferred Stocks -- 5.44%
- -------------------------------------------------------------------------------
Specialty Capitalization - North America -- 5.44%
- -------------------------------------------------------------------------------
Abgenix, Inc./(1)(3)/ 276,923 $ 1,869,230 1.29%
Net Genics, Inc.
Convertible, Series D,
Preferred R/(1)(2)(3)/ 250,000 500,000 0.35%
Ontogeny, Inc./(1)(2)(3)/ 600,000 1,500,000 1.04%
Orchid Biocomputer,
Inc./(1)(2)(3)/ 180,180 1,999,998 1.38%
Tularik, Inc./(1)(2)(3)/ 200,000 2,000,000 1.38%
- -------------------------------------------------------------------------------
$ 7,869,228 5.44%
- -------------------------------------------------------------------------------
Total Preferred Stocks
(identified cost $7,799,998) $ 7,869,228
- -------------------------------------------------------------------------------
See notes to financial statements
14
<PAGE>
Worldwide Health Sciences Portfolio as of August 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
(Expressed in United States Dollars)
Call Options Purchased -- 0.10%
Percentage of
Security Shares Value Net Assets
- --------------------------------------------------------------------------------
Specialty Capitalization - Far East -- 0.10%
- --------------------------------------------------------------------------------
Biota Holdings, Ltd.,
Expires 12/15/99,
Strike Price
AUD1.80/(1)(2)(3)(4)/ 78,738 $ 144,883 0.10%
- --------------------------------------------------------------------------------
$ 144,883 0.10%
- --------------------------------------------------------------------------------
Total Call Options Purchased
(identified cost $31,000) $ 144,883
- --------------------------------------------------------------------------------
Total Investments
(identified cost $159,768,138) $144,458,475 99.86%
- --------------------------------------------------------------------------------
Other Assets, Less Liabilities $ 203,690 0.14%
- --------------------------------------------------------------------------------
Net Assets $144,662,165 100.00%
- --------------------------------------------------------------------------------
/(1)/ Non-income producing security.
/(2)/ Security valued at fair value using methods determined in good faith by or
at the direction of the Trustees.
/(3)/ Restricted security.
/(4)/ AUD = Australian dollars
See notes to financial statements
15
<PAGE>
Worldwide Health Sciences Portfolio as of August 31, 1998
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
As of August 31, 1998
(Expressed in United States Dollars)
Assets
- --------------------------------------------------------------------------------
Investments, at value (identified cost, $144,458,475
$159,768,138)
Cash 15,746
Receivable for investments sold 1,827,205
Dividends receivable 33,600
Deferred organization expenses 8,224
- --------------------------------------------------------------------------------
Total assets $146,343,250
- --------------------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------------------
Demand note payable $ 1,670,000
Payable to affiliate for Trustees' fees 587
Other accrued expenses 10,498
- --------------------------------------------------------------------------------
Total liabilities $ 1,681,085
- --------------------------------------------------------------------------------
Net Assets applicable to investors' interest in $144,662,165
Portfolio
- --------------------------------------------------------------------------------
Sources of Net Assets
- --------------------------------------------------------------------------------
Net proceeds from capital contributions and $159,971,828
withdrawals
Net unrealized depreciation (computed on the basis (15,309,663)
of identified cost)
- --------------------------------------------------------------------------------
Total $144,662,165
Statement of Operations
For the Year Ended
August 31, 1998
(Expressed in United States Dollars)
Investment Income
- --------------------------------------------------------------------------------
Dividends (net of foreign taxes, $142,488) $ 777,659
- --------------------------------------------------------------------------------
Total investment income $ 777,659
- --------------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------------
Investment adviser fee $ 1,162,878
Administration fee 450,794
Trustees fees and expenses 10,039
Custodian fee 250,801
Legal and accounting services 13,123
Amortization of organization expenses 2,417
Miscellaneous 23,290
- --------------------------------------------------------------------------------
Total expenses $ 1,913,342
- --------------------------------------------------------------------------------
Deduct --
Reduction of custodian fee $ 248,283
- --------------------------------------------------------------------------------
Total expense reductions $ 248,283
- --------------------------------------------------------------------------------
Net expenses $ 1,665,059
- --------------------------------------------------------------------------------
Net investment loss $ (887,400)
- --------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
- --------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 9,926,335
Foreign currency transactions (147,686)
- --------------------------------------------------------------------------------
Net realized gain $ 9,778,649
- --------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $(37,330,872)
- --------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) $(37,330,872)
- --------------------------------------------------------------------------------
Net realized and unrealized loss $(27,552,223)
- --------------------------------------------------------------------------------
Net decrease in net assets from operations $(28,439,623)
- --------------------------------------------------------------------------------
See notes to financial statements
16
<PAGE>
Worldwide Health Sciences Portfolio as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets (Expressed in United States Dollars)
Increase (Decrease) Year Ended Year Ended
in Net Assets August 31, 1998 August 31, 1997
- --------------------------------------------------------------------------------
From operations --
Net investment loss $ (887,400) $ (756,950)
Net realized gain 9,778,649 1,806,693
Net change in unrealized (37,330,872) 22,021,209
appreciation (depreciation)
- --------------------------------------------------------------------------------
Net increase (decrease) in
net assets $(28,439,623) $ 23,070,952
from operations
- --------------------------------------------------------------------------------
Capital transactions --
Contributions $ 79,343,537 $160,659,674
Withdrawals (58,958,737) (31,113,638)
- --------------------------------------------------------------------------------
Net increase in net assets
from capital $ 20,384,800 $129,546,036
transactions
- --------------------------------------------------------------------------------
Net increase (decrease) in $ (8,054,823) $152,616,988
net assets
Net Assets
- --------------------------------------------------------------------------------
At beginning of year $152,716,988 $ 100,000
- --------------------------------------------------------------------------------
At end of year $144,662,165 $152,716,988
- --------------------------------------------------------------------------------
See notes to financial statements
17
<PAGE>
Worldwide Health Sciences Portfolio as of August 31, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data (Expressed in United States Dollars)
Year Ended August 31,
----------------------------------
1998 1997
- --------------------------------------------------------------------------------
Ratios to average daily net assets
- --------------------------------------------------------------------------------
Expenses 1.06% 1.25%
Expenses after custodian fee reduction 0.92% 1.18%
Net investment loss (0.49)% (0.81)%
Portfolio Turnover 34% 14%
- --------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $ 144,662 $ 152,717
- --------------------------------------------------------------------------------
See notes to financial statements
18
<PAGE>
Worldwide Health Sciences Portfolio as of August 31, 1998
NOTES TO FINANCIAL STATEMENTS
(Expressed in United States Dollars)
1 Significant Accounting Policies
------------------------------------------------------------------------------
Worldwide Health Sciences Portfolio (the Portfolio) is registered under the
Investment Company Act of 1940 as a diversified, open-end management
investment company which was organized as a trust under the laws of the State
of New York on March 26, 1996. The Declaration of Trust permits the Trustees
to issue interests in the Portfolio. Investment operations began on September
1, 1996, with the acquisition of securities with a value of $51,528,696,
including unrealized appreciation of $9,053,201, in exchange for interest in
the Portfolio by one of the Portfolio's investors. The following is a summary
of the significant accounting policies of the Portfolio. The policies are in
conformity with generally accepted accounting principles.
A Investment Valuations -- Securities listed on a recognized stock exchange,
whether U.S. or foreign, are valued at the last reported sale price on that
exchange prior to the time when assets are valued or prior to the close of
trading on the New York Stock Exchange. In the event that there are no sales,
the last available sale price will be used. If a security is traded on more
than one exchange, the security is valued at the last sale price on the
exchange where the stock is primarily traded. Securities for which market
quotations are not readily available and other assets are valued on a
consistent basis at fair value as determined in good faith by or under the
supervision of the Portfolio's officers in a manner specifically authorized by
the Board of Trustees.
B Income -- Dividend income is recorded on the ex-dividend date, except that
certain dividends from foreign securities are recorded on the ex-dividend date
or as soon thereafter as the Portfolio is informed of the dividend.
C Federal Taxes -- The Portfolio has elected to be treated as a partnership
for United States Federal tax purposes. No provision is made by the Portfolio
for federal or state taxes on any taxable income of the Portfolio because each
investor in the Portfolio is ultimately responsible for the payment of any
taxes. Since some of the Portfolio's investors are regulated investment
companies that invest all or substantially all of their assets in the
Portfolio, the Portfolio must satisfy the applicable source of income and
diversification requirement, (under the Code) in order for its investors to
satisfy them. The Portfolio will allocate at least annually among its
investors each investors' distributive share of the Portfolio's net investment
income, net realized capital gains, and any other items of income, gain, loss,
deduction or credit.
D Expense Reduction -- Investors Bank & Trust Company (IBT) serves as
custodian of the Portfolio. Pursuant to the custodian agreement, IBT receives
a fee reduced by the credits which are determined based on the average daily
cash balances the Portfolio maintains with IBT. All significant credit
balances used to reduce the Portfolio's custodian fees are reflected as a
reduction of operating expense on the Statement of Operations.
E Deferred Organization Expenses -- Costs incurred by the Portfolio in
connection with its organization are being amortized on the straight-line
basis over five years.
F Use of Estimates -- The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expense during the reporting period.
Actual results could differ from those estimates.
G Foreign Currency Translation -- Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases
and sales of foreign investment securities and income and expenses are
converted into U.S. dollars based upon currency exchange rates prevailing on
the respective dates of such transactions. Recognized gains or losses on
investment transactions attributable to foreign currency rates are recorded
for financial statement purposes as net realized gains and losses on
investments. That portion of unrealized gains and losses on investments that
result from fluctuations in foreign currency exchange rates are not separately
disclosed.
H Forward Foreign Currency Exchange Contracts -- The Portfolio may enter into
forward foreign currency exchange contracts for the purchase or sale of a
specific foreign currency at a fixed price on a future date. Risks may arise
upon entering these contracts from the potential inability of counterparties
to meet the terms of their contracts and from movements in the value of a
foreign currency relative to the U.S. dollar. The Portfolio will enter into
forward contracts for hedging purposes as well as nonhedging purposes. The
forward foreign currency exchange contracts are adjusted by the daily exchange
rate
19
<PAGE>
Worldwide Health Sciences Portfolio as of August 31, 1998
NOTES TO FINANCIAL STATEMENTS CONT'D
(Expressed in United States Dollars)
of the underlying currency and any gains and losses are recorded for financial
statement purposes as unrealized until such time as the contracts have been
closed.
I Other -- Investment transactions are accounted for on a trade date basis.
2 Investment Advisory Fees, Administrator's Fees and Other Transactions with
Affiliates
------------------------------------------------------------------------------
Pursuant to the Advisory Agreement, OrbiMed Advisors, Inc. ("OrbiMed") serves
as the Investment Adviser of the Portfolio. Under this agreement OrbiMed
receives a monthly fee at the annual rate of 1% of the Portfolio first $30
million in average net assets, 0.90% of the next $20 million in average net
assets, and 0.75% of average net assets in excess of $50 million. The fee rate
declines for net assets of $500 million and greater. In addition, effective
September 1, 1997, OrbiMed's fee is subject to an upward or downward
performance fee adjustment of up to 0.25% of the average daily net assets of
the Portfolio based upon the investment performance of the Portfolio compared
to the Standard & Poor's Index of 500 Common Stocks over specified periods.
For the year ended August 31, 1998, the fee was equivalent to 0.64% of the
Portfolio's average daily net assets and amounted to $1,162,878.
Under an Administration Agreement between the Portfolio and its Administrator,
Eaton Vance Management (EVM) , EVM manages and administers the affairs of the
Portfolio. EVM earns a monthly fee in the amount of 1/48th of 1% (equal to
0.25% annually) of the average daily net assets of the Portfolio up to
$500,000,000, and at reduced rates as daily net assets exceed that level. For
the year ended August 31, 1998, the administration fee was 0.25% of average
net assets.
Except as to Trustees of the Portfolio who are not members of the Adviser or
EVM's organization, officers and Trustees receive remuneration for their
services to the Portfolio out of such investment adviser and administrative
fees. Certain officers and Trustees of the Portfolio are also officers or
directors/trustees of the above organizations. Trustees of the Portfolio that
are not affiliated with the Investment Adviser may elect to defer receipt of
all or a portion of their annual fees in accordance with the terms of the
Trustee Deferred Compensation Plan. For the year ended August 31, 1998, no
significant amounts have been deferred.
3 Investments
------------------------------------------------------------------------------
Purchases and sales of investments other than U.S. Government securities and
short-term obligations aggregated $87,345,755 and $59,067,914 respectively for
the year ended August 31, 1998.
4 Federal Income Tax Basis of Investments
------------------------------------------------------------------------------
The cost and unrealized appreciation/depreciation in value of the investments
owned at August 31, 1998, as computed on a federal income tax basis, were as
follows:
Aggregate cost $159,768,138
------------------------------------------------------------------------------
Gross unrealized appreciation $ 13,315,964
Gross unrealized depreciation (28,625,627)
------------------------------------------------------------------------------
Net unrealized depreciation $(15,309,663)
------------------------------------------------------------------------------
5 Risks Associated with Foreign Investments
------------------------------------------------------------------------------
Investing in securities issued by companies whose principal business
activities are outside the United States may involve significant risks not
present in domestic investments. For example, there is generally less publicly
available information about foreign companies, particularly those not subject
to the disclosure and reporting requirements of the U.S. securities laws.
Foreign issuers are generally not bound by uniform accounting, auditing, and
financial reporting requirements and standards of practice comparable to those
applicable to domestic issuers. Investments in foreign securities also involve
the risk of possible adverse changes in investment or exchange control
regulations, expropriation or confiscatory taxation, limitation on the removal
of funds or other assets of the Portfolio, political or financial instability
or diplomatic and other developments which could affect such investments.
Foreign stock markets, while growing in volume and sophistication, are
generally not as developed as those in the United States, and securities of
some foreign issuers (particularly those in developing countries) may be less
liquid and more volatile than securities of comparable U.S. companies. In
general, there is less overall governmental supervision and regulation of
foreign securities markets, broker-dealers, and issuers than in the United
States.
20
<PAGE>
Worldwide Health Sciences Portfolio as of August 31, 1998
NOTES TO FINANCIAL STATEMENTS CONT'D
(Expressed in United States Dollars)
6 Line of Credit
------------------------------------------------------------------------------
The Portfolio participates with other portfolios and funds managed by EVM and
its affiliates in a committed $100 million unsecured line of credit agreement
with a group of banks. Borrowings will be made by the Portfolios and funds
solely to facilitate the handling of unusual and/or unanticipated short-term
cash requirements. Interest is charged to each portfolio or fund based on its
borrowings at an amount above the Eurodollar rate or federal funds effective
rate. In addition, a fee computed at an annual rate of 0.10% on the daily
unused portion of the facility is allocated among the participating portfolios
and funds at the end of each quarter. At August 31, 1998, the Portfolio had a
balance outstanding pursuant to this line of credit of $1,670,000. The
Portfolio did not have any significant borrowings or allocated fees during the
year ended August 31, 1998.
7 Restricted Securities
------------------------------------------------------------------------------
At August 31, 1998, the Portfolio owned the following securities (representing
5.54% of net assets) which were restricted as to public resale and not
registered under the Securities Act of 1933. The Fund has various registration
rights (exercisable under a variety of circumstances) with respect to these
securities. The fair value of these securities is determined based on
valuations provided by brokers when available, or, if not available, they are
valued at fair value using methods determined in good faith by or at the
direction of the Trustees.
Date of
Description Acquisition Shares Cost Fair Value
------------------------------------------------------------------------------
Call Options Purchased
------------------------------------------------------------------------------
Biota Holding, Ltd.
Expires 12/15/99,
Strike Price AUD1.80 12/18/95 78,738 $ 0 $144,883
------------------------------------------------------------------------------
$ 0 $144,883
------------------------------------------------------------------------------
Preferred Stocks
------------------------------------------------------------------------------
Abgenix, Inc. 12/18/97 276,923 $1,800,000 $1,869,230
Net Genics, Inc.
Convertible, Series
D, Preferred R 3/20/98 250,000 500,000 500,000
Ontogeny, Inc. 3/13/97 600,000 1,500,000 1,500,000
Orchid Biocomputer,
Inc. 12/19/97 180,180 1,999,998 1,999,998
Tularik, Inc. 10/14/96 200,000 2,000,000 2,000,000
------------------------------------------------------------------------------
$7,799,998 $7,869,228
------------------------------------------------------------------------------
Warrants
------------------------------------------------------------------------------
Cambridge Antibody
Technology, Ltd. 08/28/96 15,500 $31,000 $266
------------------------------------------------------------------------------
$31,000 $266
------------------------------------------------------------------------------
21
<PAGE>
Worldwide Health Sciences Portfolio as of August 31, 1998
INDEPENDENT ACCOUNTANTS' REPORT
To the Trustees and Investors
of Worldwide Health Sciences Portfolio:
- --------------------------------------------------------------------------------
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Worldwide Health Sciences Portfolio as of
August 31, 1998, and the related statement of operations for the year then
ended, and the statement of changes in net assets and the supplementary data for
the years ended August 31, 1998, and 1997. These financial statements and
supplementary data are the responsibility of the Portfolio's management. Our
responsibility is to express an opinion on these financial statements and
supplementary data based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and supplementary
data are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned at
August 31, 1998, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and supplementary data present fairly,
in all material respects, the financial position of Worldwide Health Sciences
Portfolio at August 31, 1998, the results of its operations for the year then
ended, and the changes in its net assets and supplementary data for the years
ended August 31, 1998, and 1997 in conformity with United States generally
accepted accounting principles.
PricewaterhouseCoopers
Chartered Accountants
Toronto, Ontario
October 2, 1998
See notes to financial statements
22
<PAGE>
Worldwide Health Sciences Portfolio as of August 31, 1998
INVESTMENT MANAGEMENT
Worldwide Health Sciences Portfolio
Officers
James B. Hawkes
President and Trustee
Samuel D. Isaly
Vice President and
Portfolio Manager
Raymond O'Neill
Vice President
Michel Normandeau
Vice President
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Independent Trustees
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment
Banking, Harvard University Graduate School of
Business Administration
Norton H. Reamer
Chairman and Chief Executive Officer
United Asset Management Corporation
John L. Thorndike
Formerly Director, Fiduciary Company Incorporated
Jack L. Treynor
Investment Adviser and Consultant
23
